Medicare Nears 40, but Is Still Changing

Administrator Touts New Focus on Preventive Care

July 28, 2005 -- Medicare is starting to use its enormous financial heft to
try to alter the way the government pays for increasingly expensive medical
services, its chief said Thursday.

Speaking at a commemoration of the 40th anniversary of the enactment of
Medicare and Medicaid programs, current administrator Mark McClellan, MD,
touted moves to focus the programs' $500 billion-per-year budget on preventive
care and better health outcomes.

July 30 will mark four decades since President Lyndon Johnson signed the two
programs into law.

Medicare's costs are projected to rise nearly 7.5% per year over the next
decade, a cost increase that has put the program in financial peril. Medicaid's
costs are rising at a similar rate, causing a political clash between the
federal government and the states as the Bush Administration moves to cut $10
billion in spending.

"We simply cannot afford to spend what by some estimates is as much as
30 to 40 cents of every health care dollar on treatments that may be
unnecessary and on complications that could be prevented," McClellan said
of Medicare in a speech to reporters.

"How we spend matters, because it affects how our whole health care
system works."

Congress directed Medicare to begin offering screening tests and preventive
care for several high-cost chronic diseases, including heart failure and
diabetes. The program is also paying for general physicals for every senior
entering the program from now on.

The agency is getting set to launch pilot projects designed to pay doctors
more for following accepted treatment guidelines or getting better outcomes for
patients. The project remains controversial with doctors' groups including the
American Medical Association.

McClellan said the programs are designed to change Medicare from a system
that simply pays for treatments once seniors become ill to one that pays to
prevent them in the first place.

"It makes better public health sense and it's a better way to spend
dollars to diagnose heart disease early and to treat it effectively with
medications and other steps that are proven to slow or prevent cardiovascular
disease," he said.